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10 | 17TH - 23RD JUNE 2016 | UTILITY WEEK Policy & Regulation Referendum special report If, come 10pm on 23 June, the British public has voted in favour of leaving the European Union, the next – and immediately pressing – question will be what 'out' path will the UK follow? U nder this model, the UK would become a member of the European Economic Area (EEA). Chatham House senior research fellow for energy, environment and resources Anthony Froggatt, says this would be the "least disruptive" but the move would not gain Britain more inde- pendence because "Norway just adopts the European legislation". This would include legislation surrounding the single energy market, as well as environmental frame- works – such as the EU bathing and drink- ing water directives. Rather than gaining more say over rules and regulations, the UK would still have to contribute to the EU budget, and adopt two- thirds of EU rules – as Norway currently does – without having any input into the development of those rules. This is described by National Grid direc- tor of UK LNG Jon Butterworth as "not hav- ing a chair at the table but standing at the back of the room". To further hamper the UK utilities – as well as wider UK plc in general – a Policy Network report states that the nature of this type of agreement and bureaucratic delays in rule adoption would place "companies at a competitive disadvantage". Under a similar type of settlement the UK could join the European Energy Community, as a number of non-EU Balkan states have, but the same situation applies, with these nations also having to "adopt en masse" EU laws while having no say in their creation, according to Froggatt. I f the UK followed the Swiss model, the prime minister and the government would be tasked with negotiating a series of deals with the EU on specific policies. However, negotiating with the EU, espe- cially on access to the single energy market, is neither quick nor straightforward. Switzer- land began its negotiations in 2007 and these were temporarily suspended in 2014 because of a separate dispute over immigration. University College London professor of international energy and climate change policy Michael Grubb says the talks are stuck in gridlock and are "actually quite a mess", with the European Union saying "flatly that is not on offer" to Britain. He adds that the UK would be better off in the single energy market" but that would inevitably mean giv- ing up control over relevant policies. The nature of the Swiss option also raises similar questions to that of Norway over the amount of independence the UK would have. Switzerland keeps its laws in align- ment with those of the EU to ensure its busi- nesses are able to trade with member states, effectively meaning the country adopts EU laws without a say in their development. The Swiss also contribute to the EU budget. The WTO option The Norwegian model The Swiss model What might 'Out' look like? I f the UK followed this route, it would aim to strike its own deals with the rest of the world, independently from the EU. However, this move is fraught with risk. If the UK was unable to agree any interna- tional trade deals, UK exports would be subject to tariffs. The chief danger is the amount of time it takes to strike these deals. Canada has spent seven years negotiating with the EU, and that deal still has to be ratified by the European Council and Parliament. Added to this, US president Barack Obama stated that Britain would be at the "back of the queue" in any trade deal with the US if the country chose to leave the EU. The UK could also end up sitting outside the single energy market, and according to shadow energy minister Alan Whitehead, Britain would have to ensure sufficient domestic generating capacity or potentially pay more for the electricity and gas imported to the UK through the interconnectors. Energy minister Andrea Leadsom has said that remaining in the EU would limit the UK's ability to strike gas deals with non-EU nations under forthcoming European Com- mission plans. Having the ability to agree independent deals would help increase the nation's energy security. UK contributions to the EU budget The UK has been a net contributor to the EU budget in 42 out of its 43 years of mem- bership, contributing a total of £496 billion in real terms gross, and £177 billion net of receipts and the budget rebate. The UK has received an abatement, or rebate, on its budget contribution since 1985, worth £4.9 billion in 2015 and £116 billion (in real terms) since it was first agreed. Source: House of Commons briefing paper - Exiting the EU: impact in key UK policy areas